Roth 401(K) Vs. Traditional 401(K) And What Is The Best Option

The complexity of selecting investment options coupled with the uncertainty of continuing to live in the U.S. resulted in analysis paralysis.

With the advent of Roth 401(k) in the workplace, many individuals are wondering if they should contribute to Roth 401(k) or a traditional 401(k).

Gray Frame Corner
Gray Frame Corner
Gray Frame Corner
Gray Frame Corner

What Is A Traditional 401(k)

Traditional 401(k) accounts are funded with money on a pre-tax basis, meaning it comes out of your paycheck before you pay any taxes on it.

What Is A Roth 401(k)

In a Roth 401(k), you contribute money after paying your taxes. Contributions to the Roth 401(k) also do not reduce your adjusted gross income.

Example Of Roth 401(k) Vs. 401(k) If tax brackets and income at the time of contribution and withdrawal stay the same, investing in Roth 401(k) vs. traditional 401(k) yields identical results.

Gray Frame Corner
Gray Frame Corner
Gray Frame Corner
Gray Frame Corner

Why 401(k) Is Better Than A Roth 401(k)

In an ideal world the difference between the 401(k) v/s a Roth 401(k) is just the timing of when you receive the tax break.

Lower Retirement Income Levels

Your income should be lower in retirement compared to when you are working. When you are working, you need money to fund your lifestyle and to save for retirement.

Swipe Up for more about Roth 401(K) Vs. Traditional 401(K) And What Is The Best Option

Read more

Best Place For Technology Jobs Is Still San Francisco Bay Area

What Is The SECURE Act And 9 Ways It Will Actually Boost Your Retirement